Oil exploration and production companies, from Oil and Natural Gas Corp. to Oil India Ltd. and Petronet LNG, stand to benefit if natural gas is subject to the goods and services tax regime.
The reappointed Minister of Petroleum and Natural Gas, Hardeep Singh Puri, during a press conference on Tuesday discussed the government's focus areas and the potential inclusion of natural gas under the GST regime.
While gas coming under the GST regime has been discussed for a few years now, if actually implemented, it could benefit the entire gas value chain, according to Morgan Stanley.
The key upside would be faster adoption of gas as India's primary energy source, whose current contribution stands at 6%.
Upstream Companies
Morgan Stanley expects oil exploration and production companies to be one of the biggest beneficiaries.
The brokerage anticipates a 5% increase in ONGC's standalone earnings and a 3-4% increase for Oil India due to the potential compensation of investments or costs associated with gas production.
CNG Companies
Morgan Stanley assumes that compressed natural gas distributors are most likely to pass on the benefit of lower gas costs to end consumers.
The brokerage expects Indraprastha Gas Ltd. and Gujarat Gas Ltd. to benefit, as gas could become more favourable when compared to alternative fuels. This would drive volumes for these companies.
GAIL and Petronet LNG
The brokerage also lists GAIL and Petronet LNG Ltd. as beneficiaries.
It believes that GAIL—the largest gas transmission company—could benefit from the growing gas consumption as well as lower cost of gas imports in the country.
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